One Sweet Business: A Q&A With Butter Lane Cupcakes Founder Pam Nelson
by Erin Greenawald, May 8, 2013  0 comments
Pam Nelson didnt plan on having a food-related career. With a background in finance, she spent most of her 20s and 30s as an analyst, working for firms like Citibank and Merrill Lynch. She was happy with her job and may well have stayed thereif she hadnt been laid off during the financial crisis.

At that point, Pam and her friend Linda Lea, an Executive Producer of shows like Chopped and Sweet Genius, along with Maria Baugh, the Managing Editor of Food Network Magazine, had been talking about opening a cupcake shop together. After getting laid off, Pam went to them and said, This is the time to do it. She figured she would work on it for maybe six months or a year, and then shed go back and get a real job once the market rebounded.

That was five years ago. Since then, the ladies have opened Butter Lane Cupcakes, which has turned into a thriving business with two storefronts, a constant stream of delivery and catering orders, and incredibly popular cupcake baking classes. And, its turned into a (more than) full-time job for Pam.

We sat down with Pam to talk about the ins and outs of running a small food business and get her advice for anyone thinking of embarking on a venture of his or her own.

Since your background wasnt in food, was there a big learning curve for you?

I think that we were pretty smart about keeping it a very simple model. Theres no way I would take on, for example, a full-on restaurant. With cupcakes, your inventory is simplebasically a few dairy things and a lot of sugar and flourand our production model is very simple. We decided from the very beginning that we only wanted to make chocolate, vanilla, and banana cupcakes. All of the variation comes from our icing, which is much easier to work with. Keeping it simple really helped us as newbies.

Then, we learned from people who are really smart. I went into a test kitchen with a great pastry chef, and he really taught menot so much about the nuances of fine pastry baking, because we knew that wasnt what we were doingbut how to make a great vanilla cupcake, 1,000 times a day. You have to learn to make excellent quality at high volume, and it has to be really consistent.

Finally, weve hired great managers and bakers to handle all the production so we can handle the other things. The mantra in small business is, Work on your business, not in it. I think the fact that none of us are bakers has actually kept us from falling into that trap.

Do you still find yourself working in the kitchen or behind the counter at times?

Well thats the most fun part of the business. All you want to do is go over there and ice cupcakes. Thats kind of the fantasy that people havethat you just get to work in this bakery and make people happy. I go over there and do that two or three times a week because its fun and its good to stay in touch.

But the reality of business is that you have to focus more on things like sales, marketing, meetings, corporate customers, accounting, and vendor relationships. Its all of those other things that arent quite as romanticbut I think are still funthat deserve your attention as an owner.

How do you and your co-founders work together on the business?

Photo May 26 6 06 54 PM 300x300 One Sweet Business: A Q&A With Butter Lane Cupcakes Founder Pam NelsonI think really one of the big successes of the business is that weve all worked together really well and stayed friends. And I think a lot of that is because weve had really clearly defined responsibilities.

Maria is great at the sales and marketing part of it. Shes really into social media so shes been great with that, and also at e-commerce. Thanks to her, we have a ton of good relationships with FourSquare, CourseHorse, Google, Groupon, and Gilt. And Linda, with her experience in the food industry, has a great palette. So shes the one who will come in and work with the chefs on whats coming up on the menu. And then I handle the business sidethe day-to-day planning and execution.

Have you all had to adapt your business at all since starting?

You absolutely have to be adaptable when running a business like this. If you think that youre going to open a door and people are just going to start coming in and that your cash register is going to support all the expenses of a small businessthats a fantasy. Theres just no way. We were pretty smart in realizing, after being open for about five minutes, that walk-in traffic wasnt going to support us.

About a year into the business, we decided to add cupcake classes. It just started from slow nights in the shop and the fact that customers started asking me about it. So I started teaching classes in our little bakery. Five people would show up and eventually 10 people were showing up. Once those started to sell out, we made the decision to take the store next door because we needed more space.

And then we ran a Groupon deal, thinking that we would sell 200 or 300 seats, and we sold something like 9,000. It was crazywe were calling them trying to figure out how to shut it down, we were cancelling vacations. We ended up having to hire instructors. It was really exciting because it basically launched a new business. I know Groupon gets a lot of criticism, but it has been nothing but a great thing for us.

Whats the most rewarding thing to you about owning a cupcake business?

Being in charge of my own thing. I think almost any small business owner will say that. Its great to have a paycheck coming inand Ive worked in the corporate world and I loved my jobbut at some point theres some sort of powerlessness in not knowing who your next boss is going to be, or not having control over what your next project is going to be. In small business, the good news is that its all yours. You control your destiny and get to make the decisions.

Of course, the hard part is that its all yours. Its on you to make the rent and to make payroll, and if sales arent where they should be, its your job to scramble. If you talk to any small business owner, the phrase that they understand best is making payroll. And thats a challenge, especially in this economy.

Whats the thing people find most surprising about your job?

I think theyre shocked that Im not fat. I actually lost weight when we started the business. For one thing, you just live on caffeine and worry for the first two years of it. And second, its an extremely physical job. I drag around 50 pound bags of sugar, go to Restaurant Depot, and run up and down the stairs at our shop about 1,000 times a day.

I think people are sometimes surprised by how hard is the work is. There is a misconception that this can be a retirement job. As satisfying as it is, its still a round-the-clock job. Even when Im at home, I wake up thinking about it, and I fall asleep thinking about it.

What advice would you have for someone thinking of starting a food business of his or her own?

I would say be realistic, but maintain your stubborn optimism. Youre creating something out of nothingand its your job to convince others to believe in it. When everyone else says its crazy, a small business owner has to keep pushing it up the hill. Adapt your model, try new things, but never give up on your core idea. First you survive, and then you thrive.